When it comes to why consumers leave an insurance provider, there are two schools of thought. These are high premiums and poor customer experience.
The flooding that occurred in Yorkshire and the Midlands in 2019 could have a considerable impact on switching activity within the home insurance market. With the percentage of policyholders switching at the point of renewal increasing in 2019, individuals that have a negative claims experience could leave their provider if they fail to respond adequately.
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The Association of British Insurers estimates that 2,250 claims have been received relating to the flooding of homes and businesses, with initial costs totalling £45m ($58.5m). This one event equates to 11% of the total cost of all weather-related claims that occurred in 2018.
Findings from GlobalData’s UK 2019 Insurance Consumer Survey indicate that 80% of home insurance policyholders who have made a claim on their current policy were satisfied with the service provided during the claims process, with only 4.5% being dissatisfied. These findings should reassure providers that despite the high number of home insurance claims, the processes in place are on the whole up to the task.
Insurers should instead be more concerned that premiums in the home insurance market will have to increase, particularly if flooding events such as this increase in frequency due to climate change.
GlobalData’s research indicates that 65.4% of home insurance policyholders who switched at the point of renewal did so because they were offered a lower premium. Home insurance providers should look towards increasing investments in technology to help with cost savings throughout the value chain, allowing for premiums to become increasingly competitive.
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